China and the Philippines are poised to bring their economic cooperation into a new era, and they have a fair chance to achieve the first ground-level implementation of the joint development of oil and natural gas in the South China Sea, Chinese analysts said on Wednesday.

The comments came after a two-day visit by Chinese State Councilor and Foreign Minister Wang Yi to the Philippines.

On Monday, Philippine President Rodrigo Duterte expressed willingness to make joint efforts with China to strengthen cooperation in the fields of energy and infrastructure, the Global Times of China reported.

Wang said that China is ready to have further discussions with the Philippines about joint development of oil and natural gas in the South China Sea.

Chinese analysts said that given the warming bilateral ties, China and the Philippines have a fair chance to achieve the first ground-level implementation of joint development of oil and natural gas in the South China Sea. Joint development, a concept that dates back decades, hasn’t yet come about for various reasons.

The oil reserve under the South China Sea is vast and significant for both countries, which both heavily depend on crude imports. According to one estimate by China National Offshore Oil Corp, the region holds some 125 billion barrels of oil and 500 trillion cubic feet of natural gas, according to media reports.

Jin Lei, an associate professor at the China University of Petroleum, told the Global Times on Wednesday that cooperation between China and the Philippines on oil and gas will be a breakthrough in exploitation of resources in the South China Sea and set an example of how to turn conflict into cooperation.

“This could be the first ground-level implementation of the principle of joint development of oil and natural gas in the South China Sea,” Jin said.

“The Philippines will get more practical benefits from joint exploitation,” Jin said.

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said that cooperation and joint exploitation will yield the best approach, although it would also be a difficult one.

Finding and producing oil under the ocean “costs a huge amount of money, and the exploitation has to take into consideration that there are significant political risks,” Lin said.

Zhao Jianglin, an expert on Southeast Asian affairs at the National Institute of International Strategy under the Chinese Academy of Social Sciences, said that China and the Philippines are at a crucial juncture where they are about to bring their relationship into a new era.

“Previously, due to the Philippines’ unique economic structure, its economic cooperation with China existed, but at a shallow level. The level of bilateral economic cooperation was much weaker than China’s economic ties with other countries in the region such as Malaysia,” Zhao told the Global Times on Wednesday.

“The weak cooperation in turn prevented trade and investment from becoming the booster and stabilizer in the bilateral relationship,” Zhao noted.

China maintained its ranking as the Philippines’ top trade partner for the second year running in 2017, with bilateral trade figure at $51.28 billion, up 8.6 percent year-on-year, according to data from the Chinese customs. In the first nine months, the figure continued to grow at annual rate of 12.4 percent.

On Tuesday, concurrent with Wang’s trip, the Bank of China Manila Branch, together with 13 of the Philippines’ biggest banks, jointly ratified the launch of the Philippine Renminbi (RMB) Trading Community, a platform intended to enhance trading and monetary transactions between the two countries.

“Recently, the Philippines entered a track of medium- and high-speed growth, and it needs capital, aid, technology and markets, which are things China can offer. This has paved the road for practical bilateral cooperation,” Zhao said.

In those areas, China could provide better assistance to the Philippines than the US, as the latter’s gap with the Philippine economy is too wide, noted Zhao.

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Philippine Resources Journal is your best source of information and insights on the various resource industries of the Philippines. We are the magazine that the key people in mining, petroleum, renewable energy and other resource industries rely upon for news and feature coverage of their businesses. Read more…